Strategic autonomy in trade

The global economy has entered a more complex and fragmented phase. Productivity is slowing across both advanced and emerging economies. Traditional drivers of growth such as technological diffusion, open markets, and capital mobility are no longer delivering the same returns. In advanced markets, aging populations are reducing labor force growth. At the same time, investment is being held back by high debt levels, tight fiscal space, and rising uncertainty around trade and geopolitics. Global trade, once a powerful engine of growth, has stagnated since the global financial crisis of 2008. Value chains have matured, and rising protectionism is reshaping how countries engage with global markets. The multilateral trading system is under pressure, and countries are increasingly turning to bilateral and unilateral tools to protect domestic industries and secure critical supply chains.

In this context, the GCC faces a critical decision point. The region’s historically low tariffs and open trade model have enabled access to global inputs, but they have also made member states vulnerable to external shocks. Industrial capacity in high-tech and precision sectors remains limited, and countries are heavily dependent on imports of raw and intermediate goods. This reliance increases exposure to disruptions and undermines efforts to build self-sufficiency.

Individual member states are pursuing different responses. Saudi Arabia is focused on industrial localization and is working to build domestic production in strategic sectors such as chemicals, metals, and renewable energy components. The UAE is expanding its role as a logistics and re-export hub by streamlining customs procedures and negotiating bilateral trade agreements. These approaches reflect distinct national priorities, but they also create opportunities for coordination. Regional integration can help connect complementary strengths, reduce duplication, and build collective leverage.

This paper proposes a two-track strategy. At the national level, trade policy should be more closely aligned with industrial development goals. This means identifying supply chain vulnerabilities, diversifying sources of critical inputs, and supporting outbound investment in upstream production. At the regional level, GCC countries should use the Customs Union as a platform to align trade and industrial policy, coordinate negotiations in priority sectors, harmonize incentive frameworks, and co-finance joint industrial projects. Together, these measures would strengthen supply chain resilience, reduce external dependencies, and allow the region to engage globally from a position of strategic strength.